401K

smconant — Wed, 22 Oct 2025 18:12:40 GMT

I will be retiring next Feb when I am 66. I have a 401K and will need to take at least a portion out next year because of financial burdens. My husband is already on Social Security. Can you make any suggestions?

Re: 401K

Cindy4 — Wed, 22 Oct 2025 18:49:12 GMT

Only take out the absolute minimum you need to cover the financial burden. The less you withdraw, the lower your taxable income. Large withdrawals in one year can push you into a higher federal income tax bracket, making the entire withdrawal (and potentially other income) more expensive. Some people break it up. For instance: Take a portion out at the end of this year and another portion after January 1st of next year. That spreads the burden over 2 years possibly lowering the tax bracket you'll land in.

Traditional 401(k) withdrawals are 100% taxable. This taxable income will be added to your "combined income" calculation, which determines how much of your husband's Social Security benefit will be taxed. If your combined income (Adjusted Gross Income + nontaxable interest + half of your husband's SS benefit) exceeds a certain threshold (e.g., $32,000 for married filing jointly), up to 85% of his SS benefit can become taxable. Try to keep your withdrawal amount below the threshold that triggers this tax jump.

When you request the withdrawal, your plan administrator will likely withhold 20% for federal taxes. You can ask them to withhold more if you think 20% won't cover your total tax liability (from the 401(k) plus his SS tax increase), or you can save a portion of the distribution to pay taxes next April.

To predict your tax burden, consider using one of our calculators: Withholding calculator Tax Estimator

Hope this helps!

Cindy

topic Re: 401K in Retirement tax questions

401K

Re: 401K